"Up to now, we had been saying that the rapid expansion was in response to customer needs -- that it was inevitable," Toyoda told a news conference.

"The basic rule of the Toyota Production System is to only build as many cars as there is demand for, and we ourselves broke that rule," he said.

Toyoda said some of the sales during the rapid expansion over the last decade may have been driven artificially by sales financing, and was not based on "real demand". (Reporting by Chang-Ran Kim and Nobuhiro Kubo)